Are you trying to decide where to use your $7,000 worth of new TFSA contribution room for 2026?
If so, you have many options to choose from.
You can deposit virtually any type of stock into your TFSA in 2026, provided it’s not stock in a company that you control yourself. Most Canadian ETFs, bonds, bond funds, money market funds, and GICs are also 100% TFSA-eligible. In this article I’ll explore three asset classes that you can invest your $7,000 worth of TFSA room into in 2026.
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Stocks
Stocks are the go-to TFSA investment, and with good reason. Over the long term, stocks tend to outperform every other asset class, including even Canadian real estate. With a diversified portfolio of stocks, you can sit back and watch the market perform for you, often returning 10% or more per year. The key with stocks is to do thorough research and ensure that you have quality securities in your portfolio.
Consider Suncor Energy (TSX:SU), for example. It’s probably Canada’s strongest energy company, an integrated oil and gas player that’s active in exploration, production, refining, and gas stations. The company’s operational diversification gives it the ability to profit in a variety of different oil and gas markets. For example, crude oil marketing makes money when oil prices are high, while refining makes money when the “crack spread” (price difference between oil and gasoline) is wide, even when oil prices aren’t that high. On top of that, Suncor stock is reasonably valued, with a 17 P/E ratio and a strong balance sheet. It’s a stock that merits inclusion in a well-diversified Canadian portfolio.
Exchange-traded funds
Next up on the list we have exchange-traded funds (ETFs). These are funds that invest in diversified portfolios of stocks, so you don’t have to pick hundreds of them individually.
Consider the Suncor Energy example I explored in the previous section. It’s a good stock, but is it so good that you can afford to put all of your money in it? Probably not. Oil prices could crash, the company could suffer a health and safety-related lawsuit, or management could borrow too much money. All of these risk factors actually materialized at various points in Suncor’s history, sending the stock tumbling. And it’s the same story with any other stock you can name. So, you need a whole portfolio of stocks that spread your eggs across many baskets.
This is exactly what ETFs provide. A good ETF will hold hundreds of stocks, charging a small (sometimes as low as 0.01%) fee to hold them for you. Overall, a good ETF like the iShares S&P/TSX Capped Composite Index Fund is a good choice.
Guaranteed investment certificates
Last but not least, we have guaranteed investment certificates (GICs). These are bank deposits that are locked up for a period of time, paying out a lump sum interest rate either monthly or at the end of the term. On average, they are paying about 2.75% per year right now. This is considerably higher than the interest rate you’ll earn on a savings account. So, GICs might make sense if you are an especially risk-averse investor.
